Letter to Batch 42 of the Early Retirement Masterclass

It's been a great honour and privilege to conduct a 5-Day Early Retirement Workshop for you.

Batch 42 graduates into a market environment that is, in many ways, the most interesting we have seen in years. Two events in particular deserve your attention as you set out to build and maintain your dividend portfolios: the Straits Times Index crossing the 5,200 mark, and the arrival of a new Federal Reserve Chairman in the United States. Both have direct consequences for the kind of investing you have just learned.

The STI at 5,200 — A Milestone That Cuts Both Ways

As of this week, the Straits Times Index is trading at approximately 5,212 points, having reached a fresh record high of 5,169 on 17 June 2026. For those of you who have followed Singapore equities for any length of time, you will know that this is extraordinary. For most of the past decade, the STI languished between 2,800 and 3,500. Breaking convincingly above 4,000 was already newsworthy. Crossing 5,000, let alone 5,200, is a generational milestone.

I want you to hold two thoughts in your head simultaneously about this achievement. The first is that it is genuinely good news. It reflects growing international confidence in Singapore as a financial centre, improving earnings quality among STI constituents, and the government's ongoing efforts to revitalise the local equity market. If you already hold a portfolio of Singapore blue chips, your net worth has risen. 

The second thought is more sobering: a rising index compresses dividend yields. This is not a crisis — it is arithmetic. When the price of a stock goes up, and the dividend stays the same, the yield you earn on each dollar invested falls. A stock that yielded 6% at $1.00 yields only 5% at $1.20. The STI's ascent to 5,200 means that many of the counters you studied during the course now offer yields that are meaningfully lower than the historical averages we used in class.

What does this mean in practice for a Batch 42 graduate? A few things.

First, do not abandon your dividend strategy simply because entry yields look less attractive today than they did a year ago. The strategy works precisely because it forces discipline. You buy when the yield is attractive relative to the risk-free rate, and you hold through market cycles. If the market has run ahead of fundamentals, patience is your ally, not a pivot to growth stocks.

Second, be more selective. At STI 3,000, there were dozens of counters offering yields above 5% with decent balance sheets. At STI 5,200, that list is shorter. This is not a reason to lower your standards — it is a reason to be more patient with deployment. Keep your watchlist active and your powder dry. Market pullbacks, even modest 10–15% corrections, can restore attractive entry yields very quickly.

Third, do not confuse capital appreciation with income. If your goal is to build a portfolio that replaces your employment income, rising prices alone do not get you there. A $200,000 portfolio yielding 4% generates $8,000 per year. The same portfolio, with a market value of $240,000 after capital appreciation, still generates $8,000 per year if the dividends have not grown. Stay anchored to the income, not the price.

For the S-REITs among us — and many of you built significant REIT positions during the course — the picture is nuanced. REITs have historically been valued on yield spreads over the risk-free rate. A REIT yielding 5.5% when 10-year Singapore Government Securities are at 3.0% offers a 250 basis-point spread, which the market generally considers fair. As the STI has risen and REIT unit prices have followed, those spreads have compressed. Whether they compress further depends heavily on what happens in Washington, D.C., which brings us to the second major development.

A New Fed Chief — What Kevin Warsh Means for Us

On 22 May 2026, Kevin Warsh was sworn in as Chairman of the Federal Reserve, succeeding Jerome Powell. Warsh is a former Fed Governor who served during the 2008 Global Financial Crisis, and he has a well-documented hawkish instinct — meaning he is more inclined to raise interest rates to fight inflation than to cut them to stimulate growth.

His first FOMC meeting as Chair, held just this past week, resulted in rates being held steady. But the language was unambiguous: inflation remains elevated at its highest level in over three years, with core inflation running at approximately 2.5%. Warsh signalled that if inflation does not decline, rate hikes remain on the table. He also made a notable stylistic break from Powell by dramatically shortening the Fed's policy statement — removing forward-guidance language and eliminating details about the indicators the Fed is watching. Markets, accustomed to being spoon-fed signals, found this disorienting.

Why should Singaporean dividend investors care about the chairman of the Federal Reserve? Because interest rates in the United States remain the gravitational centre of global capital markets. When the Fed raises rates, US Treasuries become more attractive, drawing capital away from riskier assets — including Singapore equities and REITs. When US rates are expected to remain higher for longer, borrowing costs for leveraged entities like REITs rise, directly compressing their distributable income per unit.

The Warsh era introduces a specific kind of uncertainty that we have not had to navigate since the early 1980s under Paul Volcker: a Fed chair who is willing to prioritise price stability even at the cost of near-term economic pain, and who is deliberately less transparent about his next moves. You should expect volatility. Not because anything is broken, but because markets price in expectations — and Warsh has made those expectations harder to form.

For your portfolios, I would offer the following thoughts. S-REITs with high floating-rate debt exposure are most vulnerable to a Warsh rate hike. Before adding to any REIT position, check the interest coverage ratio and the proportion of debt that is fixed-rate versus floating. A REIT with 70% fixed-rate debt is far better insulated than one with 70% floating-rate exposure. 

On the other hand, Warsh's hawkishness is a double-edged sword. If he successfully tames inflation and restores credibility to the Fed's 2% target, the medium-term outcome is lower rates and a more benign environment for income investing. The pain, if it comes, is likely to be front-loaded. Investors with long time horizons — which should be all of you, since you are building portfolios intended to last decades — can afford to view short-term rate volatility as an opportunity rather than a threat.

One more observation on Warsh: his reduced communication style changes the nature of the Fed-watching game. Under Powell, investors built careers on parsing Fed minutes for subtle word changes. Under Warsh, that game may be less rewarding. This is, in my view, a small blessing for retail investors like yourselves. It levels the playing field slightly and redirects attention where it belongs — to the fundamentals of the businesses you own.

I’ve learnt as much from you as you have learnt from me

One of the things I keep saying in class is that I learned as much from you as you have from me. A good challenge for me this round is the thoughtful questions on dollar-cost averaging (DCA) versus lump-sum investing. In the age of AI, not only can I answer the question, but I can also code a simulator to compare a lump-sum strategy and a DCA strategy that keeps uninvested sums in a cash portfolio that returned 2%. 

Based on the results, I can confirm that lump-sum investing yields higher returns for the STI and the S&P 500. DCA enthusiasts should not be too disappointed, as lump-sum investing comes with much higher risk as well.

Putting It Together

Batch 42 enters the market at a fascinating juncture. The STI at 5,200 is a reminder that Singapore equities can surprise to the upside — and a caution that buying at elevated prices demands greater care and patience. A new Fed Chief in Washington introduces a regime change whose full implications will take months to become clear.

Through all of this, the framework you have learned in this course remains your anchor. Buy businesses with durable earnings and a track record of returning cash to shareholders. Buy them when the yield is attractive relative to the alternatives. Diversify across sectors so that no single rate move or policy shift sinks your income. And review your portfolio regularly — not obsessively, but thoughtfully.

The market will test you. It always does. What separates successful investors from the rest is not a superior ability to predict the next move of the STI or the Fed — nobody can do that consistently. It is the discipline to stick to a sound process when the noise is loudest.

I am proud of the work every one of you put into Batch 42, and I look forward to hearing about your investing journeys in the months and years ahead. As always, my door remains open.

Good luck, and invest wisely.

Christopher Ng Wai Chung

Tree of Prosperity

20 June 2026

Is passive income overrated ?

 

[The field of personal finance has been enriched by the humanities for many years, with sociologists such as Thomas Stanley writing about The Millionaire Next Door. I find it very fortunate that I can now read the works of a history professor who has read hundreds of historical works on how to get rich in America and has personally undergone the journey to become a millionaire himself. 

This is a worthy book for anyone who is serious bout personal finance.]

The promise of passive income has become a cornerstone of modern personal finance advice. Build a portfolio, collect dividends, and watch your wealth grow while you sleep—it sounds almost too good to be true. And according to Joseph Moore's How to Get Rich in American History, it might be exactly that.

Moore presents a compelling counterargument to the passive income narrative: most people who earn passive income spend it. And when you're spending your returns rather than reinvesting them, you forfeit the exponential growth that makes compound interest so powerful. The math is simple. If your dividend portfolio returns 4% annually but you withdraw that 4% to live on, your principal never grows. Meanwhile, conventional wisdom suggests your wealth should multiply year after year. It's a sobering critique that deserves serious consideration.

The Case Against Passive Income

Moore's argument cuts to the heart of a fundamental human truth: people have expenses. A retiree living off dividend income needs that money to pay the mortgage, buy groceries, and maintain their lifestyle. A young investor building toward financial independence might feel entitled to enjoy some of the fruits of their labour. In both cases, the passive income gets consumed, and the portfolio stagnates.

This matters because the entire pitch of passive income rests on compounding. If you're not reinvesting your returns, you're breaking the only engine that makes passive income wealth-building. It's the difference between a portfolio that grows from $500,000 to $1.3 million over 20 years (with reinvestment at 6% returns) and one that stays at $500,000 while you spend the annual $30,000 it generates. The narrative we're sold—retire early and live off your dividends—assumes you can live indefinitely on a fixed dollar amount, even as inflation erodes its purchasing power.

Moore's historical perspective offers valuable lessons about why this matters. Throughout American financial history, the wealthiest individuals weren't those who lived off passive returns; they were those who reinvested them relentlessly.

But There's More to the Story: The Psychology of Motivation

Yet Moore's thesis, while thought-provoking, doesn't tell the whole story. Many investors don't fall into the trap of spending 100% of their passive income. A real estate investor might reinvest a portion of rental income back into their properties. A dividend investor building wealth might live on 70% of their annual returns while letting 30% compound. A semi-retired person might need passive income to cover basic living expenses but continues earning a modest income from work, allowing them to reinvest the surplus.

But the more important gap in Moore's analysis isn't mathematical but psychological. I've spent years studying investor behaviour, and what I've learned is this: motivations matter in personal finance. In fact, I'd argue that financial success is as much a sociological phenomenon as it is a mathematical one.

Here's what I mean: the pure math says that spending your passive income is inefficient. But psychology says something different. The knowledge that money is flowing into your account every quarter—regardless of what you do—is profoundly motivating. It reinforces the investor's identity, validates their past decisions, and creates positive momentum to keep building. For many people, this motivation is the only thing that prevents them from abandoning their investment discipline when markets dip or life gets complicated.

Consider three psychological traps that derail novice investors:

1. Dopamine-seeking — The impulse to chase exciting returns, leading to speculation and emotional trading.
2. Recency bias — Overweighting recent good performance while underestimating risk in up markets.
3. Benchmark blindness — Focusing on absolute returns while ignoring how your portfolio behaves during downturns.

A passive income stream combats all three. The regular arrival of dividends provides consistent positive reinforcement without requiring you to check stock prices or chase hot tips. It gives you something to show for your discipline. This isn't captured in a spreadsheet, yet it's the difference between an investor who holds for 30 years and one who panics and sells after the first correction.

In my view, passive income isn't primarily a wealth-building mechanism—it's a structural solution to behavioural discipline. The mechanism works because it solves a motivation problem, not just a math problem. Without that quarterly reminder that "you made the right choice," many investors would never build substantial wealth in the first place, regardless of the mathematics involved.

Why History Matters to Your Finances

Reading How to Get Rich in American History does something that most personal finance books don't: it grounds financial decision-making in real history. It's easy to accept the passive income narrative when you're only looking at current market conditions and recent case studies. But when you examine how wealth has actually been built across centuries of American economic life, you see patterns that aren't obvious in personal finance blogs.

I've spent years examining the historical record of investment, and one insight stands out: properties of an ideal investment don't change, but the context around them does. What made an ideal investment in 1800 shares has a certain DNA with what makes an ideal investment today. Yet the specific mechanisms—tax treatment, available asset classes, interest rate regimes, regulatory frameworks—shift dramatically.

Understanding this teaches you that financial advice doesn't exist in a vacuum. Tax policies change. Interest rates fluctuate. Economic structures transform. The strategies that worked brilliantly in one era might be obsolete in another. And the promises made to you by investment marketers—whether they're promising passive income or anything else—should be viewed with the healthy scepticism that comes from knowing how many "sure things" have failed throughout history.

When Moore examines American wealth-building across centuries, he's not just telling you what worked—he's showing you the difference between enduring principles and temporary conditions. For instance, dividend investing dominated wealth-building in the 20th century partly because of tax policy and the availability of traded shares, not just because dividends are intrinsically powerful. Yet the discipline of reinvestment—the core principle beneath Moore's critique—has always been central to building lasting wealth.

A sense of financial history also helps you separate timeless principles from fleeting trends. Spending less than you earn? That was true in 1850, and it's true in 2026. Letting your investments compound over decades? Still powerful. Seeking investments with predictable cash flows? Always valuable. But the specific mechanics of how you invest and what you can reasonably expect from that investment deserve scrutiny rooted in how things have actually worked out across different periods. History gives you that critical lens.

The Hidden Success Factor: Deliberate Architecture

The real lesson from both Moore's critique and the psychological research is this: passive income only works if you've designed your life around reinvestment, not dependence.

I call this "salary truncation"—the practice of fixing your lifestyle expenses and treating all passive income above that fixed level as capital to be reinvested. It's not about willpower or self-denial. It's about structural design. When you set your expenses at 70% of active income and 50% of passive income, you're not relying on motivation to do the right thing. You're making the right thing, the path of least resistance.

Moore's critique is mathematically correct: if you spend all your passive income, your portfolio won't grow. But his framework misses something crucial: people who successfully built wealth across history did two things simultaneously. First, they understood the mechanics of compound growth. Second, and more importantly, they created structures that made reinvestment automatic rather than aspirational.

The Synthesis: Why Moore Matters

What I've come to believe is that passive income is neither overrated nor underrated—it's simply misunderstood. It's a powerful tool for those who use it deliberately and thoughtfully. It's a trap for those who see it as a solution to overspending. And it's a structural enabler of financial discipline for those who understand that motivation matters as much as mathematics.

Moore's How to Get Rich in American History is valuable not because it provides the final answer, but because it asks the right questions and grounds them in evidence across centuries. He shows us that the wealthy didn't get wealthy by living off passive income, but they built it. This historical perspective cuts through the marketing noise and forces you to ask: What am I actually trying to do? Build wealth, or live off existing wealth? The answer matters because the structures you need are completely different.

If you're building a dividend portfolio, if you're planning to live off passive income, or if you're simply trying to understand how wealth actually gets built in America, this book deserves a careful read. The insight you'll gain isn't just about passive income. It's about the intersection of history, psychology, and deliberate design—and recognising that the best financial decisions are the ones you've actually thought through, rather than the ones you've been sold.

$100 of Dividends a Month: The Minimum Effective Dose for Newbie Beginners

 

Most people who discover dividend investing fall into one of two camps.

The first camp gets excited, reads a few articles, and dives straight in with their life savings. The second camp reads the same articles, decides it's too risky or too boring, and never starts at all.

Both groups are making the same mistake: committing fully before they actually know whether dividend investing works for them.

There's a better way. Start with the minimum effective dose.

Dividend Investing Is Not for Everyone

Let's be honest about this upfront.

Dividend investing requires patience. You won't get rich quickly. There are no ten-baggers here, no viral meme stocks, no overnight fortune. What you get instead is a slow, steady stream of cash — paid out quarterly or semi-annually — that compounds quietly in the background.

Some people find this deeply satisfying. Others find it mind-numbingly dull and abandon the strategy at the first market downturn.

The problem is, you don't know which type you are until you've actually experienced it. Reading about dividends is not the same as receiving them, watching your stock drop 15% and having to hold on anyway, or deciding whether to reinvest your payouts or spend them.

So before you commit $100,000 or your entire portfolio to a dividend strategy, consider testing it first — with just $24,000.

The Math Behind $100 a Month

Here's the simple arithmetic of the minimum effective dose:

• Portfolio size: $24,000
• Target dividend yield: ~5% per year
• Annual income: $1,200
• Monthly average: $100

That's it. $24,000 invested in a portfolio yielding around 5% annually will produce roughly $1,200 in payouts spread throughout the year, averaging $100 per month.

This isn't a get-rich-quick number. It's a learning number. It's enough to feel real — real enough that you'll pay attention to ex-dividend dates, real enough that a dividend cut will sting, real enough that you'll discover whether this style of investing suits your temperament.

Think of it the way a doctor thinks about medication: the minimum effective dose is the smallest amount that still produces a meaningful result. $100 a month is enough to teach you everything you need to know about whether dividend investing belongs in your financial life.

What to Buy: The Singapore Dividend Toolkit

For Singapore investors, building a simple 5% yielding portfolio doesn't require exotic instruments or deep financial expertise. Three asset types form the backbone of most successful dividend portfolios here:

1. Singapore REITs (Real Estate Investment Trusts) REITs are legally required to distribute at least 90% of their taxable income to unitholders. This makes them among the most reliable dividend payers available to retail investors. Typical yields range from 4–6% annually. Examples include Frasers Centrepoint Trust and Keppel DC REIT.

2. Singapore Blue-Chip Bank Stocks Singapore's three major banks — DBS, OCBC, and UOB — have historically offered dividend yields in the 5–6% range and are among the most financially robust institutions in Asia. They offer the rare combination of income and relative stability.

3. Business Trusts These are infrastructure-backed instruments with contracted cash flows from essential services like broadband networks, utilities, and ports. A well-known example is Netlink NBN Trust, which runs Singapore's fibre network. Steady and unglamorous — in the best possible way.

A beginner portfolio might allocate $24,000 roughly equally among these three categories, providing diversification across sectors while keeping the approach simple.

Simple Steps to Get Started

Step 1: Open a brokerage account. You'll need a brokerage that allows you to trade Singapore Exchange (SGX) stocks. Options include Tiger Brokers, Moomoo, or a CDP-linked account with a local bank brokerage.

Step 2: Identify your holdings. Screen for stocks in the STI and SGX Next 50 universe that offer sustainable dividend yields above 5%. Focus on sustainability — a high yield that gets cut is worse than a modest yield that holds steady.

Step 3: Allocate your $24,000. Spread your capital across 3–6 holdings to avoid concentration risk. Equal-weighting across REITs, banks, and business trusts is a sensible starting point for beginners.

Step 4: Track your dividends. Note the ex-dividend dates for each holding. Most Singapore stocks pay dividends semi-annually. Your $1,200 will likely arrive in two or three tranches across the year, not evenly every month — and that's normal.

Step 5: Decide what to do with the income. Reinvest it to compound your returns over time, or use it for spending. Either choice is valid. What matters is that you make a conscious decision and stick to it.

Step 6: Review after one full year. After 12 months, ask yourself: Did I enjoy this? Did I panic when prices fell? Did receiving dividends feel meaningful, or did I barely notice? The answers will tell you whether to scale up, adjust your strategy, or try something else entirely.

Why $24,000 and Not More?

Because the point of the minimum effective dose is to limit the cost of being wrong.

If you discover after one year that you hate dividend investing — that you'd rather be in growth stocks, index funds, or something else entirely — you've risked $24,000 to learn that lesson. Not your entire nest egg.

And if you discover you love it? Then you have a live, real-money portfolio to scale from, with 12 months of personal experience behind you.

This is the sensible way to commit to any investment philosophy: test it at a scale that's meaningful but not catastrophic.

Ready to Go Further?

If this resonates with you and you'd like to learn the full framework behind building a dividend portfolio that can eventually replace your income, I run a preview session of the Early Retirement Masterclass where I walk through the strategy in depth.

Sign up for the free preview here →

You'll learn how real students have built portfolios generating thousands of dollars in passive income annually — and whether the approach makes sense for your own financial situation.

Dividend investing isn't for everyone. But the only way to find out if it's for you is to start.

This article is for educational purposes only and does not constitute financial advice. Please do your own due diligence before investing.

Are You Investing, Or Just Collecting Stocks? Come Find Out at Moomoo Bugis on 3 June

 

Most Singaporean retail investors I meet do not actually have a portfolio. They have a collection.

There is a difference, and it usually only becomes obvious when someone asks the question I like to ask in my talks: "What is your strategy?"

The honest answer, for most people, is some version of: "Well… I bought DBS during the dip in 2016, then added OCBC and UOB because the yields looked good, then a few REITs, then Sea Limited because everyone was talking about it, then Grab because I thought I missed Sea, then…"

You see the pattern. The portfolio has grown by accident, not by design. Some positions are for income. Some are for growth. Some you genuinely cannot remember why you bought.

If that sounds uncomfortably familiar, I am running a free 2-hour workshop where we will fix exactly this.

The Talk

Building a Resilient Singapore Portfolio: Income, Growth, or Both? 3 June 2026 (Wednesday), 7pm – 9pm Moomoo Store, 496 North Bridge Road, #01-01, Singapore 188739

Register here: https://www.moomoo.com/sg/events/stores

What We Will Actually Cover

I am going to walk you through a real (anonymised) portfolio from a 38-year-old IT manager I will call Alex. Fourteen holdings. About S$120,000. Up roughly 18% on paper, which is not bad. But 38.6% of the entire portfolio is sitting in DBS, OCBC, and UOB — three businesses that move together in the same rate cycle. He has no idea whether he is an income investor or a growth investor. He has REITs he loves and tech positions he is quietly scared of.

Alex is not stupid. Alex is like most of us.

We will pull his portfolio apart on screen and rebuild it deliberately, using only Singapore-accessible building blocks: REITs, the three local banks, Business Trusts, SGX-listed ETFs, growth stocks, and the new SDRs that give you direct exposure to names like BYD, Xiaomi and CATL.

By the end of the session, you will know:

• How to decide whether you are actually an income, growth, or balanced investor — and why getting this wrong costs you years.
• The three model allocations I use for Conservative, Moderate, and Aggressive Singapore profiles.
• Why your HDB, your CPF and your SGD salary should change how you build the equity side of your portfolio (most local content ignores this).
• How to spot dangerous concentration before it hurts you — not after.
• A simple annual review process so the portfolio stays a portfolio and does not slowly drift back into a collection.

Why I Am Doing This Talk

I have been investing in Singapore equities for over 15 years and teaching at Dr Wealth for nearly as long. The single biggest reason retail investors underperform is not stock picking. It is the absence of a structure to hold their stock picks together.

A good portfolio is like a meal. The ingredients matter, but the recipe matters more. A bag of carrots, garlic and beef is not dinner. Fourteen tickers on Moomoo are not a portfolio.

If you have been investing for a few years, have built up some capital, and have started to suspect that you are not quite sure what you are doing, this is the talk for you. Bring your questions. I keep the Q&A long on purpose.

Practical Details

• Date: Wednesday, 3 June 2026
• Time: 7pm – 9pm (please arrive by 6.45pm)
• Venue: Moomoo Store, 496 North Bridge Road, #01-01, Singapore 188739 (5 minutes' walk from Bugis MRT)
• Cost: Free
• Register: https://www.moomoo.com/sg/events/stores

Seats at the Bugis store are limited, and these Moomoo sessions tend to fill up. If you are planning to come, register early.

See you on Wednesday.

Christopher Ng Wai Chung, CFA, JD